South African economic transactions index increases slightly

After breaking six months of declines in December, the BankservAfrica Economic Transactions Index (BETI) improved again in January 2023.

However, despite this positive movement, ‘more-of-the-same’ can be expected this year as economic woes prevail.

The BETI is an early economic scorecard for South Africa in general, specifically regarding growth trends.

It correlates highly with the South African Reserve Bank’s co-incident indicator and GDP figures while appearing a quarter earlier.

On an ongoing basis, there are always minor differences between previously published index numbers and the most recent ones.

It is because of the processes of deflating – to strip out the impact of inflation from the data – and seasonally adjustment – to strip out any seasonal behaviour in the data.

Although the BETI’s improvement across all measurement periods signals some tentative improvement in the broader economy, it remains only a blip.

“January has remained fairly grim with load shedding continuing unabatedly, interest rates rising, and inflation remaining at elevated levels,” said independent economist Elize Kruger.

She added that the impact of the global economic slowdown is also still playing a role in local finances.

Casting a shadow on January’s improvement is the recent wave of downward revisions to economic growth forecasts for South Africa.

The South African Reserve Bank recently revised its forecast from 1.1% to 0.3% for 2023.

With average population growth running closer to 1.3% per annum, these growth rates imply that on a per capita basis, the average South African citizen will become poorer in 2023.

Kruger said while the improvement in the BETI is encouraging, stormy clouds are gathering with many indications showing we could expect ‘more of the same’ in 2023.

Load-shedding is likely to continue, and households will remain under pressure due to elevated inflation levels, interest rates, and a tight labour market environment.

“Thus, just as 2022 was characterised by an economic scenario of ‘muddle-along-little-thriving’, one month in, we can expect to experience more of the same in 2023,” she said.